All Forum Posts by: Allyssa McCleery

Using your "mentor" will be very powerful in helping you underwrite the property. When you meet with them, ask them what type of vacancy rates they are experiencing in their properties nearby the one you are considering buying. Compare the age and construction type of the property to any one they may have that is similar and determine what the average repairs per unit will be. It sounds like this is a type of a deal in which you can structure favorable terms for yourself such as owner financing. It may be beneficial for you to negotiate seller financing with interest only for the first 3-5 years and then you can refinance into a long term loan once you have the property stabilized. 

I agree that this is not an issue you should be dealing with in a class B neighborhood. It sounds like you are done with this tenant and would prefer to get rid of them but as someone else suggested you can set up an agreement with the tenant to vacate by a certain date rather than go through the eviction process. This will benefit him because he will not have issues renting another unit with an eviction on his record and it will benefit you to give you the opportunity to find a more responsible tenant. Another route would be to set up bi-weekly payments until the end of his lease. You could pose it as a way to help them avoid late fees as well. 

For commercial lending, asset based shouldn't be a problem. For residential there are lenders who will do it but at significantly higher interest rates. Last time I checked it was between 7-8%. If you find something better please let me know!

I think you should upgrade the units to the market value and raise the rents $150 instead. That would put them still below market rent but in line with market standards. As long as it makes sense with your number to maintain a month or two of vacancy in order to have increased rent for at least the next year. As far as upgrades, I would shop around your market for properties that are currently up for rent at your target market price. Go through the pictures or tour the property to determine what your property is lacking in comparison. Once you have a list of everything you can determine what will yield you the highest increase in rent vs how much the repair will cost. 

@Sheila Campbell How long have you owned the house? Maybe you have some equity you can borrow against?

Please do!

@Ehsan Rishat I am definitely going to try out this strategy! Thanks for sharing.

I agree with @Marcia Maynard that you do not have to necessarily wait for a tenant to leave to renovate units. If a tenant loves where they live and know that can stay there and in a short time their unit will become renovated, they will have more patience and work with you during this process. You can also incentivize them as it is cheaper to keep them in there and avoid vacancy. 

This video provides great insight into how to analyze a market:

https://www.youtube.com/watch?v=lZeb-Bd6A8o

@Frank Wong I agree with you to pick one market and stick with it. Another investor I know was able to scale very quickly in a midwestern market by immersing himself in it and finding the right contacts over time. There probably is going to be several markets you come across that will fit your metrics so don't spend too much time looking for a diamond in the rough.